SUGAR

FUNDAMENTALS

Spot sugar traded flat at the major centres on limited activity. Demand remained dull from the stockists and bulk consumers, while mills were offloading their monthly quota. Sugar prices are not likely to recover till 2009, given the glut situation. Meanwhile, Indian govt. is considering the extension of freight incentives to sugar mills depending upon the level of actual exports in the financial year that ends March. Also, following numerous appeals by sugar millers, UP govt. has acceded to lower the minimum price of sugar cane to around Rs. 900/tonne. ISMA forecasts Indian sugar exports to be at 2.5 MMT, as against the govt. forecast of 3 MMT. With domestic consumption rising by about 1 MMT to 20 MMT, the ending stocks are expected at about 16 MMT. However, the lower output forecast will likely result in little price movement.

TECHNICALS

A long hollow candle is formed in the charts with supporting volumes, suggesting near-term firmness in the market. Prices break the recent trading range and close above the short term EMAs as well as near term resistances, while RSI is steeply rising into the overbought region, supporting the uptrend. Stochastic is flat and inconclusive in the neutral region, while a downward MACD in the positive territory indicates decreasing bullishness of the market. Sugar futures are likely to trade firm in the next session, with chances of late downward movement.

WEATHER

Late season rains in the north and south India aid developing sugarcane crop.

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